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Frederick v. Select Portfolio Servicing

January 30, 2009


The opinion of the court was delivered by: Judge Blanche M. Manning


Hoping to stave off foreclosure, plaintiff Calvita Frederick contracted to sell her home. But the sale fell through because, Frederick alleges, her mortgage company refused to give her a payoff statement and other documents she needed to close. The mortgage company eventually scheduled a sheriff's sale and Frederick lined up a second buyer who intended to bid at the sale. However, according to Frederick, the mortgage company's lawyers lied to her about when the sale was to be held. As a result, her second buyer missed the sale.

Frederick, joined by her two daughters and her ex-husband, have sued the mortgage company, DLJ Mortgage Capital, its law firm, Pierce & Associates, and its servicing agent, Select Portfolio Servicing, Inc. Their complaint contains ten counts alleging numerous claims including that the defendants thwarted Frederick's attempts to line up buyers because she is African-American. Defendant Pierce & Associates have moved to dismiss the claims against it, while defendants SLJ and Select Portfolio have moved for judgment on the pleadings. For the reasons that follow, the motions are granted in part and denied in part as follows: Counts I, II, VII, VIII and IX are dismissed with prejudice; Counts V (as to Pierce & Associates) and X are dismissed without prejudice; and Counts III, IV, V (as to DLJ and Select Portfolio), and VI are not dismissed.


Except where noted, the following facts are culled from Frederick's complaint and are accepted as true for purposes of resolving the pending motions. See Savory v. Lyons, 469 F.3d 667, 670 (7th Cir. 2006). In March 2005, Frederick entered into a contract to sell her home to Thomasina Dixon. The sale would have allowed Frederick to avoid foreclosure. To complete the sale, Frederick needed copies of several documents including a payoff statement from her mortgage company, DLJ, no later than May 24, 2005, the date her contract with Dixon expired. Frederick alleges that she made numerous requests for the documents, but DLJ failed to honor any of them until more than two years later in August 2007.

As the result of Frederick's inability to sell her home to Dixon, DLJ proceeded with foreclosure proceedings in state court. A sheriff's sale was scheduled for May 10, 2007. Frederick had lined up an investor, Scott Dantuma, to bid for the home at the sheriff's sale. The day of the sale, Frederick received a voicemail from an employee of Pierce & Associates advising Frederick that the sale had been postponed, and that she should look for the new date and time on the firm's website. However, the sale did in fact occur on May 10. As a consequence of the incorrect message left for Frederick, Dantuma did not attend the sale and DLJ bought the home for itself. After discovering that the home had been sold, Frederick succeeded in September 2007 in having the sale vacated. Frederick remains in the home because, according to the defendants, she declared bankruptcy, foreclosing foreclosure.

In their complaint the plaintiffs allege ten counts. Counts I through IV are brought under the Federal Fair Housing Act, 42 U.S.C. § 3605(a), and the Civil Rights Act of 1866, 42 U.S.C. § 1982. In count I, Frederick alleges that the defendants violated the Fair Housing and Civil Rights Acts by refusing to provide her with a payoff letter and other documents on account of her race, thwarting the sale of her home to Dixon and causing her distress. Count II is similar except that it is brought by her two minor daughters and ex-husband based upon the distress they suffered. In count III, Frederick alleges that the defendants violated the Fair Housing and Civil Rights Acts by telling her that the sheriff's sale had been rescheduled in order to thwart her planned sale to Dantuma. Count IV is similar except that it is brought by her daughters and ex-husband.

The remaining claims are brought by Frederick under Illinois law. In Counts V and VI, she alleges that the defendants tortiously interfered with her business relationships with Dixon (Count V) and Dantuma (Count VI). In Counts VII and VIII, Frederick alleges that the defendants violated the duty of good faith and fair dealing they owed under the Illinois Mortgage Foreclosure Act, 735 Ill. Comp. Stat. 5/15-1101, when they thwarted her sale to Dixon (Count VII) and planned sale to Dantuma (Count VIII). Finally, she alleges claims of intentional infliction of emotional distress based upon the derailed sales to Dixon (Count IX) and Dantuma (Count X).

Defendants DLJ and Select Portfolio responded to Frederick's complaint by filing a motion for judgment on the pleadings, while defendant Pierce & Associates filed a motion to dismiss. The bases for the motions are similar. First, the defendants argue that the civil rights and emotional distress claims arising from Frederick's planned sale to Dixon (Counts I, II, and IX) are barred by the applicable two-year statute of limitations. Next, they argue that the civil rights claims arising from Frederick's planned sale to Dantuma (Counts III and IV) fail to state a claim because the plaintiffs have not adequately alleged that the defendants interfered in the sales on account of Frederick's race. The defendants argue that the allegations in the tortious inteference counts (Counts V and VI) are also inadequate because Frederick has failed to allege some of the elements necessary to succeed on such a claim, such as knowledge and damages. As for the claims that the defendants violated the good faith and fair dealing provisions of the Illinois Mortgage Foreclosure Act (Counts VII and VIII), the defendants argue that the Act contains no such provisions. Finally, the defendants argue that Frederick's emotional distress claim based upon the planned sale to Dantuma (Count X) fails as a matter of law because the conduct alleged was not extreme and outrageous.


Before addressing the merits of the defendants' arguments, the court notes two threshold matters. First, some of the plaintiffs' claims seem to pertain only to defendants DLJ and Select Portfolio, while the others seem to pertain only to defendant Pierce & Associates. But the complaint does not distinguish between the defendants. Rather, it alleges each claim against the "Defendants" generally. Accordingly, the court will treat each claim as though it has been alleged against each defendant.

Second, DLJ and Select Portfolio purport to bring their motion as one for judgment on the pleadings under Rule 12(c). However, a motion under Rule 12(c) may be brought only after an answer has been filed. See Fed. R. Civ. P. 12(c) ("After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings."). Because DLJ and Select Portfolio have not yet filed answers, the court will treat their motion as one filed under Rule 12(b)(6). See Long v. Williams, 155 F. Supp. 2d 938, 940 n.1 (N.D. Ill. 2001). The decision to treat the motion as one brought under Rule 12(b)(6) is of little consequence to DLJ and Select Portfolio because the standards under both Rule 12(b)(6) and 12(c) are the same. See Murray v. Household Bank N.A., 386 F. Supp. 2d 993, 995 (N.D. Ill. 2005).

To survive a motion to dismiss under Rule 12(b)(6), a complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). According to the Seventh Circuit, this language imposes two hurdles. First, the complaint must describe the claim in sufficient detail to give the defendant fair notice of (1) what the claim is, and (2) the ground upon which it rests. EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007). Second, the factual allegations must "plausibly suggest that the plaintiff has a right to relief, raising that possibility above a 'speculative level'; if they do not, the plaintiff pleads itself out of court." Id. Meanwhile, the court is neither bound by the plaintiff's legal characterization of the facts, nor required to ignore facts set forth in the complaint that undermine the plaintiff's claims. See Scott v. O'Grady, 975 F.2d 366, 368 (7th Cir. 1992).

I. Civil Rights and Emotional Distress Claims Based on Dixon Contract (Counts I, II & IX)

DLJ and Select Portfolio argue that the plaintiffs' civil rights claims under the Fair Housing Act and the Civil Rights Act of 1866 (Counts I & II), as well as the claim for intentional infliction of emotional distress (Count X) that are based upon Frederick's contract with Dixon, are barred by the statute of limitations. The Fair Housing and Civil Rights Acts do not provide a statute of limitations, so federal courts borrow the analogous state statute of limitations. See Goodman v. Lukens Steel Co., 482 U.S. 656, 660 (1987). The Seventh Circuit has held that a federal civil rights claim is most analogous to a state law personal injury claim, and in Illinois the applicable limitations period is two years. See Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1528 (7th Cir. 1990); In re African-American Slave Descendants Litigation, 304 F. Supp. 1027, 1068 (N.D. Ill. 2004). Under Illinois law, claims of intentional infliction of emotional distress are also subject to a two-year limitations period. See Feltmeier v. Feltmeier, 798 N.E.2d 75, 85 (Ill. 2003).

The plaintiffs agree that the applicable limitations period is two years, but argue that the doctrine of equitable tolling is applicable and keeps their claims from being time-barred. The plaintiffs argue that they were unaware of the defendants' racial animus until Frederick received DLJ's payoff letter in August 2007, and therefore the civil rights claims ...

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